By Abdullah Azim

In Pakistan, graduate unemployment is becoming a serious challenge as it is almost three times the average unemployment rate in the country. Over 31pc of the educated youth is unemployed while women constitute 51pc of the total unemployed population in Pakistan. The unemployment rate for engineers doubled in just two years, from 11pc to 23.5pc. Similarly, the unemployment rate for computer science graduates rose from 14.2pc to 22.6pc in the two-year period. The steep rise was from 11.4pc to 29.4pc for the graduates of agricultural sciences. Even in a discipline like medical sciences the unemployment rate increased from 6.4pc to 10.8pc in just two years.

A poorly developed labour market that’s unable to accommodate a rapidly growing number of educated workers has led to a high graduate unemployment rate. According to research conducted at the Pakistan Institute of Development Economics (PIDE), the gap between the rate of overall unemployment (6.3 per cent) and that of graduates (16.1pc) is almost 10-percentage-point wide. So while it may sound counter-intuitive, the research clearly indicates that the likelihood of unemployment in Pakistan grows in proportion to the level of education.

The PIDE research paper titled ‘Disaggregating the Graduate Unemployment in Pakistan,’ states that a “misalignment” between the demand and supply of graduates has contributed to the higher unemployment rate among recent graduates. a weak university-industry linkage, means that graduates being produced are not what is being demanded by the industry. The shrinking state of the economy; and macroeconomic imbalances, mean that the increased number of people looking for jobs cannot be accommodated.

Sixty-four percent of the country’s population is under the age of 30. There is a pronounced youth bulge which, if it is not catered to, will lead to severe consequences for the state, society and the economy, thus further compounding the hopelessness, despair and destitution already plaguing the country.

Pakistan’s leading economists, former finance ministers and State Bank governors have been opining about the macroeconomic challenges the country is currently confronting. However, the issue of employment generation and job creation has often been overlooked, or simply avoided, since we are grappling with the larger and more immediate questions about debt repayment, the boom-and-bust cycle and the country’s precarious flirtation with default.

In September 2023, the The Intern­ational Labour Organisation (ILO) announced that Pakistan’s labour market has yet to recover fully from the Covid-19 pandemic and economic crisis, and the number of persons unemployed is projected to reach 5.6 million in the coming year, an increase of 1.5m since 2021. The ILO report ‘Pakistan: Employment outlook in a setting of austerity’ states that, “With employment shares declining and unemployment on the rise, the austerity-driven limitations on social outlays are expected to feed a downward spiral in labour market outcomes that could push the country’s progress toward decent work and inclusive growth backward by decades.”

Limited opportunities are available to the formally educated youth of Pakistan. Competitive examinations for government jobs for which thousands turn up for just a few seats, serve as a microcosm of the issues they are facing. Power outages, a lack of investment in research and development and a volatile political situation are some of the factors which have limited the employment opportunities that are created for Pakistan’s youth.

The public sector in Pakistan is simply inadequate to create space for the educated youth. Meanwhile infrastructural and regulatory obstacles keep the private sector from growing in the country and thus leave a large chunk of Pakistan’s educated youth unemployed. The foreign exchange crisis and rising costs caused by surging power and gas bills have severely hampered production activities. Amid an unfavourable economic situation, around 25 percent of the industries have shut down their units rendering more than 100,000 contractual employees unemployed while 75pc of the industries scaled back their productions. Millions of jobs in formal or informal sectors of the economy across the country have been lost due to a massive decline in industrial production. In four industrial sectors of Karachi and the countrywide auto vending units, stakeholders claimed that “over 500,000 people have faced joblessness.”

The education curriculum has simply no connection with industry requirements, further rendering these youth unemployable. A good example of such an area is education. By even the most conservative estimates, Pakistan needs to double the number of schoolteachers. This would clearly produce an employment windfall, but qualified teachers simply cannot be found and incentivised through a merit-based process.
The modern job market demands dynamic employees with a knack for working in physical as well as virtual environments and are able to excel in the increased complexity of economic systems.

But in Pakistan, the lack of alignment of Higher Education Institutions’s (HEIs) degree programmes with the changing needs of the job market and subsequent failure to cater to the employers’ expectations.
The outcomes include graduates’ low employability, employers’ dissatisfaction with their skill set, and a general sense of discontentment and disappointment among graduates as well as employers. Pakistani HEIs’ lack of relevance and alignment with the job market has not only failed Pakistani youth to realise their dreams but has also resulted in a very low premium on HE for graduates.

Even the large portion of the labour force earns extremely low incomes and often works in hazardous and poor working conditions. Many of those who have jobs believe they are not reasonably paid, fully employed, or decently treated.The malaise of being trapped in jobs without gain, employment without growth, and work without dignity creates its own toxic vortex of economic dissatisfaction, social disaffection and political discontent — particularly amongst the young.

Pakistan state policy tends to view employment as a somewhat incidental outcome of economic policy, rather than as a central preoccupation. For example, everyone in Pakistan is able to tell how many billions of dollars’ worth of investment will come to Pakistan with the China Pakistan Economic Corridor (CPEC), but try to find anywhere in the public discourse, or even government documents, a clear calculation of how many jobs CPEC has created and there are no answers. There aren't even any estimations.

Employment data in Pakistan is also notoriously difficult to get hold of, and notoriously unreliable! Consider this, the Pakistan Bureau of Statistics (PBS) estimated the unemployment rate at 6.3% in the 2020 – 2021 Labour Force Survey (LFS). However, only a week earlier, a Twitter post by the South Asia Index stated that Pakistan with a 4.3% unemployment rate “outranks other South Asian countries with lowest unemployment rates in the region.”

Amidst the Pakistan government's claim of a decline in the unemployment rate at the national level, the Pakhtunkhwa province tops for having an 8.8 percent unemployment rate among all the four provinces during the financial year 2020-21.

Although parents educate their children with the hope of achieving economic and social mobility, the rising inflation and deteriorating financial conditions of the country present bleak job prospects and no financial respite and it has become harder to break out of the poverty cycle many are born into.